I remember in early interviews for Fallout 3, Todd Howard was basically saying that he didn't want to have random loot in the game everything was placed in the world already regardless of your level (as opposed to Oblivion where loot was level-based and thus randomized).
Yeah, I think it was basically a holdover from Elder Scrolls. The problem was that it never increased enough to really be useful, and by the time you hard the skill and resources to repair thing fully you were so far into the game that it didn't matter anymore. All it did was increase the price of the item a little bit and raise the armor rating or weapon damage. In Fallout 3 and New Vegas repairing weapons and armor was pretty much useless.
Typically the repair skill was used to repair broken objects in the world for quests and things like that. Was that something Bethesda brought over from Oblivion? That was never in any of the older Fallout games. I never understood where the whole repairing armor and weapons thing came from.